Despite euro's brief fall to 1.4665 in Australian morning on Wednesday, euro then rebounded from there on short-covering with short-term speculators seen taking profits after Tuesday's selloff. Although the single currency fell at European opening after meeting renewed selling interest at 1.4736, price then reversed some losses and hit an intra-day high of 1.4783 as investors decided the selloff in euro was overdone. The pair later retreated again before another recovery was seen in late New York afternoon on the rise in U.S. stocks led by financial and technology shares.

Earlier, the British pound extended the decline from last month's 1.6879 high to as low as 1.6167 on Wednesday as investors worried about the Britain's fiscal position. Sterling then rebounded against the dollar and euro after U.K. finance minster Alistair Darling said that there will be no windfall tax on bank profits on its pre-budget report. Although cross buying in sterling versus euro (eur/gbp dropped sharply from 0.9091 to 0.9003) sent the price to 1.6377, the pair later retreated again after Darling announced that a 50% tax on bank bonuses and said that Britain's recession turned out to be worse than initially forecast in April. Short-covering in late New York afternoon lifted the pound off from the low of 1.6167.

The Japanese yen strengthened against most of its counterparts on Wednesday. Earlier in Asia, Japan Q3 GDP came out at 0.3% compared to the consensus forecast of 0.7%. Usd/jpy declined from 88.70 to 87.36, eur/jpy dropped from 130.46 to 128.76, aud/jpy weakened from 80.29 to 79.25 while gbp/jpy tumbled from 144.35 to 142.04.

Reserve bank of New Zealand kept official cash rate unchanged at 2.5%. The central bank's governor Alan Bollard said that he expects to begin raising borrowing costs in the middle of next year. Nzd/usd rallied to 0.7198 after his remarks.

Data to be released on Thursday include Japan CGPI, machine orders, Australia unemployment rate, German WPI, Switzerland rate decision, U.K. BOE rate decision, U.S. jobless claims, trade balance, Fed budget, Canada trade balance.